MEXICO CITY: Mexico's central bank revised down its growth outlook for this year and next on Wednesday after a sharp drop in oil prices spurred budget cuts and dampened the outlook for an opening of the country's energy sector.
The central bank, in its quarterly inflation report posted on its website, said it now sees growth in 2015 between 2.5-3.5 percent, down from 3.0-4.0 percent in its last report.
A steep drop in oil prices, which has weighed on the peso since late last year, is forcing the government to cut spending and has curbed expectations that Mexico will soon see a tide of investment that could help revive flagging crude production.
Mexico is a top crude exporter to the United States and the government relies on revenues from the state-run oil company Pemex to fund about a third of its budget.
Mexican Central Bank Governor Agustin Carstens said lower oil prices would likely persist for the foreseeable future due to a demand glut and a stronger dollar.
The bank lowered its 2016 forecast to between 2.9-3.9 percent from 3.2-4.2 percent.
The Banco de Mexico said it saw inflation ending the year below its 3 percent target amid slack domestic demand.
Mexico's finance ministry announced a 3 percent cut to the 2015 budget late last month after the central bank warned that lower oil prices required the government scale back a jump in deficit spending under President Enrique Pena Nieto.
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